CHEETAH NET SUPPLY CHAIN SERVICE INC. Goodwill & Intangibles Disclosure
NOTE 8 — Intangible Asset and Goodwill
1) | Acquisition of Edward |
On January 24, 2024, Cheetah Net entered into a Stock Purchase Agreement to acquire 100% of the equity interests in Edward. The transaction closed on February 2, 2024. The gross purchase price was $1.5 million. Consideration paid consisted of $0.3 million of cash and the issuance of 79,521 shares of the Company’s Class A common stock with a fair value of $1.2 million. In accordance with ASC 805, Business Combinations (“ASC 805”), it was determined that the fair value of the stock consideration was $0.9 million at the time of the transaction, reflecting a comprehensive evaluation of the stock’s market conditions and liquidity impacted by lock-up period restrictions.
The purchase price was initially recorded on a preliminary basis as of February 2, 2024. The assets acquired and liabilities assumed were estimated based on management’s estimates, available information, and supportable assumptions that management considered reasonable. During the second quarter of 2024, the Company finalized the purchase price allocation. As a result, adjustments were made, particularly concerning the deferred tax liability related to intangible assets, which led to a corresponding adjustment in the value of goodwill. The final valuation of assets acquired and liabilities assumed was reflected in the financial statements as of December 31, 2024 and shown below.
As of June, 2024 | As of March 31, 2024 | Change | |||||||
| Finalized value | | Preliminary value | | Amount | ||||
Acquired assets acquired and (liabilities): | | | | ||||||
Cash | $ | 79,883 | $ | 79,883 | $ | — | |||
Accounts Receivable |
| 47,354 |
| 47,354 |
| — | |||
Other Current Assets |
| 42,685 |
| 42,685 |
| — | |||
Right-of-use Lease Asset |
| 645,625 |
| 645,625 |
| — | |||
Fixed Assets |
| 60,795 |
| 60,795 |
| — | |||
Developed Technology |
| 120,000 |
| 120,000 |
| — | |||
Customer Relationships |
| 360,000 |
| 360,000 |
| — | |||
Trade Names |
| 36,000 |
| 36,000 |
| — | |||
Goodwill |
| 568,532 |
| 437,382 |
| 131,150 | |||
Other Noncurrent Assets |
| 27,000 |
| 27,000 |
| — | |||
Accounts Payable |
| (34,686) |
| (34,686) |
| — | |||
Accrued Expenses Payable |
| (20,933) |
| (20,933) |
| — | |||
Deferred Tax Liability |
| (131,150) |
| — |
| (131,150) | |||
Operating Lease Liability, Current |
| (94,548) |
| (94,548) |
| — | |||
Operating Lease Liability, Long Term |
| (506,557) |
| (506,557) |
| — | |||
Total Purchase Consideration | $ | 1,200,000 | $ | 1,200,000 | $ | — | |||
The fair value of the accounts receivable, other assets, and liabilities assumed approximates their gross contractual amounts. The fair value of the fixed assets approximates its net carrying value as of the acquisition date. The fair values of intangible assets, including $120,000 of developed technology, $360,000 of customer relationships, and $36,000 of trade names, were determined using assumptions that are representative of those market participants would use in estimating fair value.
2) | Acquisition of TWEW |
On November 27, 2024, Cheetah Net entered into a Stock Purchase Agreement to acquire 100% of the equity interests in TWEW. The transaction closed on December 19, 2024. The gross purchase price was $1 million. Consideration paid consisted of $0.2 million of cash and the issuance of 469,484 shares of the Company’s Class A common stock with a fair value of $0.8 million. Following ASC 805, it was determined that the fair value of the stock consideration was $1 million at the time of the transaction, reflecting a comprehensive evaluation of the stock’s market conditions and liquidity impacted by lock-up period restrictions.
Acquired assets acquired and (liabilities): | | | |
Cash | $ | 69,980 | |
Accounts Receivable |
| 43,120 | |
Other Current Assets |
| 1,210 | |
Customer Relationships |
| 600,000 | |
Goodwill |
| 475,861 | |
Deferred Tax Liability | (140,171) | ||
Short term loans payable |
| (50,000) | |
Total Purchase Consideration | $ | 1,000,000 |
The fair value of the accounts receivable, other current assets, and short-term loans payable assumed approximates their gross contractual amounts. The customer relationship intangibles of $600,000 were valued by discounting estimated after-tax earnings over their remaining useful lives using the multi-period excess earnings method, that are representative of those a market participant would use in estimating fair value. The Company recorded amortization of intangible assets with finite lives are computed using the straight-line method over the estimated useful lives as below:
Intangible Assets | | Estimated Useful Lives (month) |
Edward-Developed Technology | 84 | |
Edward-Customer Relationships | 144 | |
Edward-Trade Names | 84 | |
TWEW-Customer Relationships | 120 |
During the years ended December 31, 2025 and 2024, the Company incurred accumulated amortization expenses of $107,726 and $52,928, respectively.
Management conducted an impairment assessment of goodwill and intangible assets associated with the Edward acquisition in accordance with ASC 350, Intangibles—Goodwill and Other. The Company utilized a discounted cash flow (“DCF”) model to estimate the fair value of the reporting unit, taking into consideration projected revenues, operating margins, terminal value assumptions, and a discount rate reflecting the risks of the underlying cash flows.
Based on the results of this analysis, management determined that the carrying value of certain intangible assets and goodwill exceeded their estimated fair value, and accordingly, recorded an impairment charge. Key assumptions used in the analysis included management’s projections of future cash flows, growth rates, and weighted average cost of capital. Changes in these assumptions, or a decline in actual performance compared with forecasts, could result in additional impairments in future periods.
| As of December 31, 2025 | | | As of December 31, 2025 | |||||
Intangible Assets | Preliminary value | Impairment loss | Finalized Value | ||||||
Edward-Customer Relationships | $ | 310,000 | (135,346) | $ | 174,654 | ||||
Edward-Trade Names |
| 27,429 |
| (27,429) |
| — | |||
Edward-Goodwill |
| 568,532 |
| (568,532) |
| — | |||
Total future amortization expenses for finite-lived intangible assets were estimated as follows:
2026 | | 94,045 | |
2027 |
| 94,045 | |
2028 |
| 94,045 | |
2029 |
| 94,045 | |
Thereafter |
| 416,391 | |
Total | $ | 792,571 |
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 20, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.